nep-ind New Economics Papers
on Industrial Organization
Issue of 2014‒12‒13
eight papers chosen by

  1. Hotelling Games on Networks: Efficiency of Equilibria By Gaëtan Fournier; Marco Scarsini
  2. Supplier fixed costs and retail market monopolization By Caprice, Stéphane; von Schlippenbach, Vanessa; Wey, Christian
  3. Dynamic Natural Monopoly Regulation: Time Inconsistency, Asymmetric Information, and Political Environments By Ali Yurukoglu; Claire Lim
  4. Environmental Investments in Mixed vs Private Oligopoly: What are the Implications of Privatization? By Maria José Gil-Moltó; Dimitrios Varvarigos
  5. Price Elasticity of Individual Brand in Seafood Products: Interval Censored Data via Bayesian Method By Lee, Yoonsuk; Chang, Jae Bong
  6. A price concentration study on European mobile telecom markets: Limitations and insights By Pauline Affeldt; Rainer Nitsche
  7. On the antitrust economics of the electronic books industry By Gaudin, Germain; White, Alexander
  8. Deregulation, Competition, and Market Integration in China's Electricity Sector By Yanrui WU

  1. By: Gaëtan Fournier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Marco Scarsini (Engineering and System Design Pillar - Singapore University of Technology and Design)
    Abstract: We consider a Hotelling game where a finite number of retailers choose a location, given that their potential customers are distributed on a network. Retailers do not compete on price but only on location, therefore each consumer shops at the closest store. We show that when the number of retailers is large enough, the game admits a pure Nash equilibrium and we construct it. We then compare the equilibrium cost bore by the consumers with the cost that could be achieved if the retailers followed the dictate of a benevolent planner. We perform this comparison in term of the induced price of anarchy, i.e., the ratio of the worst equilibrium cost and the optimal cost, and the induced price of stability, i.e., the ratio of the best equilibrium cost and the optimal cost. We show that, asymptotically in the number of retailers, these ratios are two and one, respectively.
    Keywords: Induced price of anarchy; induced price of stability; location games on networks; pure equilibria; large games
    Date: 2014–04
  2. By: Caprice, Stéphane; von Schlippenbach, Vanessa; Wey, Christian
    Abstract: Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms' fixed costs when both intra- and interbrand competition exist. Our findings contradict the common wisdom that fixed costs do not affect market outcomes.
    Keywords: Fixed Costs,Vertical Contracting,Monopolization
    JEL: L13 L14 L42
    Date: 2014
  3. By: Ali Yurukoglu (Stanford University); Claire Lim (Cornell University)
    Abstract: This paper studies time inconsistency, asymmetric information, and political ideology in natural monopoly regulation of electricity distribution companies. Empirically, more conservative political environments have higher regulated rates of return and worse operational efficiency as measured by electricity lost in distribution. Capital investment improves reliability in a cost effective manner. We estimate a dynamic game theoretic model of utility regulation featuring investment and asymmetric information. Under-investment due to time inconsistency is severe. Conservative regulators improve welfare losses due to time inconsistency, but worsen losses due to asymmetric information.
    Date: 2014
  4. By: Maria José Gil-Moltó (University of Sheffield); Dimitrios Varvarigos (University of Leicester)
    Abstract: We compare economic and environmental outcomes under mixed and private oligopolies, in order to examine the effects of privatization when …firms invest in abatement and emissions are taxed. We show that the number of competing …firms in the market is an important factor in the determination of these effects. While privatization often involves a welfare trade-off, in the sense that higher (lower) output production implies higher(lower) pollution, there are also circumstances where it leads to both lower output and higher emissions simultaneously. Our results also indicate that privatization tends be associated with reductions in social welfare.
    Keywords: Privatization; Pollution; Abatement; Mixed Oligopoly
    JEL: L22 L32 Q52
    Date: 2014–11
  5. By: Lee, Yoonsuk; Chang, Jae Bong
    Keywords: Demand and Price Analysis, Research Methods/ Statistical Methods,
    Date: 2014–05
  6. By: Pauline Affeldt (E.CA Economics, ESMT European School of Management and Technology); Rainer Nitsche (E.CA Economics)
    Abstract: Price concentration studies investigate the relationship between market concentration and price levels. They are increasingly used in the mobile telecom industry. This paper provides a detailed account of the limitations of such studies. In addition, it proposes a specific approach in order to account for quality differences across countries, which are likely important when explaining price differences. When applying our approach to European mobile telecom markets from 2003 to 2012, we find that there is no positive relationship between concentration and prices and some indications that the relationship may be negative.
    Keywords: Price concentration study, mobile, wireless, merger control, efficiencies
    Date: 2014–11–18
  7. By: Gaudin, Germain; White, Alexander
    Abstract: When Apple entered the ebook market, prices rose. A recent court decision found Apple guilty of colluding with publishers, blaming the price hike, in part, on agency agreements and prohibiting their use. Building a model to compare these with traditional wholesale agreements, we identify a single, pivotal condition that leads prices under agency to be higher than under wholesale with two-part tariffs but lower with linear pricing. Our model shows that the increase in ebook prices can be explained, instead, by heightened competition for reading devices, and it guides our understanding of when restricting agency agreements is advisable.
    Keywords: Electronic Books,Antitrust in High-Tech Industries,Vertical Contracting,Wholesale vs. Agency Agreements,Media Economics
    JEL: D21 D40 L23 L4 L42 L51 L82 L86
    Date: 2014
  8. By: Yanrui WU (University of Western Australia)
    Abstract: This report presents an updated and expanded review of reforms in China’s electricity sector. It aims to examine the impact of reforms on competition, deregulation, and electricity market integration in China. The findings are used to draw policy implications for electricity market development, particularly the promotion of energy market integration (EMI).
    Keywords: electricity sector, reforms, unbundling, energy market integration and China
    Date: 2014

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